Chicago Soybeans: Review Of The Week

July soybeans closed at $11.34 Friday, up 15 cents on the day and 32 higher on the week.

Demand has been the main driving force for beans this week, with weekly export sales of 775,400 MT slanted heavily in favour of old crop, where stocks are already tight, with China booking 197,900 MT of the 654,400 MT total. The remaining sales of 121,000 MT for 2009/10 delivery were mostly increases for unknown destinations (frequently China) at 124,000 MT.

The USDA are due out Tuesday with their revised production and stocks estimates, with the trade on average expecting old crop stocks reduced to around 130 million bushels, from 165 million last month, in the light of the continued weight of Chinese demand. Considering that the previous week's export sales came in at 834,600 MT for old crop alone (of which China took 468,400 MT), there are some who believe that the USDA could reduced old crop stocks below 100 million bushels this coming week.

The bears still keep talking of rumours of Chinese cancellations, maybe they are starting them - somebody must be, but every week they keep failing to appear. Meanwhile China's existing purchases keep floating out of the door. Actual total US exports this week were 386,400 MT - up 38% on a week ago - I wonder if you can guess where the vast majority (225,600 MT) of that was headed?

Normally China would be shopping in South America by now, but of course they have a whole set of their own problems down there in Argentina this year, and whilst the US dollar remains weak the Chinese keep coming back.

Further forward the outlook for beans isn't so ragingly bullish, any further corn planting delays in the US will mean more soybean acres, but we won't have a concrete idea of what those acres might be until the end of June.

Meanwhile, what's that old saying? The trend is your friend: